ACQUISITION OFPROPERTY BY FOREIGNERS - Priyanga.G Altacit Global
• Governing Law- Foreign Exchange Management Act 1999.• Section 6 (3) (i) of FEMA,1999 deals about persons resident outside India acquiring immovable property in India.• Section 6(5) of FEMA 1999 says that’s a person resident outside India can hold, own, transfer immovable property situated in India.
Who are persons resident outside India?• Non- Resident Indians (NRIs) or• Foreign national of Indian Origin (PIO) or• Foreign national of non-Indian origin
NRI : An NRI is an Indian citizen residing outside India.PIO : A citizen of another country is a PIO (person of Indian origin) if he has held an Indian passport at any time or if he, his father or his grandfather has been a citizen of India.
Acquisition of immovable property inIndia by a person resident outside India i.e. by a NRI / PIO / foreign national of non-Indian origin through - i) purchase ii) gift iii) inheritance
• RBI does not permit acquisition of agricultural land, farm house and plantation property by any person resident outside India.• Any other immovable property can be acquired by an Indian citizen who is resident outside India, a person of Indian origin, foreign diplomats, foreign embassies, consulate generals and foreign corporate who have established branches, liaison offices or any place of business subject to fulfillment of certain conditions.• Foreign corporate can acquire immovable property provided the acquisition is for carrying on a permitted activity.
Acquisition by way of PurchaseThe Reserve Bank of India (RBI) has permitted the followingcategories of NRIs/PIOs to acquire Immovable Property (other thanagricultural land, plantation or farm-house property) by way ofpurchase, provided the payment is made out of Foreign ExchangeInward Remittance or any Non Resident Bank Account in India, i.e.,(Non Resident External (NR(E)), Foreign Currency Non ResidentAccount (FCNR(B)) or Ordinary Non Resident Rupee Account a/c(NRO) in connection with acquisition of Immovable Property inIndia: i. A Non Resident who is a citizen of India. ii. A Non Resident who is a Person of Indian Origin (PIO). iii. A Non Resident who has established in India a branchoffice or other place of business (excluding a liaison) office.There are no restrictions on the number of residential/commercialproperties that can be purchased.
Acquisition by way of GiftGeneral permission is granted to acquire any ImmovableProperty (other than agricultural land, plantation orfarmhouse property) by way of gift from a person(donor) who is: A Person Resident in India, or A Person Resident outside India (NRI) who is an Indian citizen or foreign citizen of Indian origin.Provided that applicable Gift Tax if any has been paid atthe time the immovable property is being gifted.
Acquisition by way of InheritanceGeneral permission is granted for inheritance of ImmovableProperty including agricultural land, plantation or farm-houseproperty from: A Person Resident in India, or A Person Resident outside India who may be an Indian citizen or Foreign Citizen of Indian Origin provided such person had acquired the said property in accordance with the provisions of Foreign Exchange Law in force at the time of acquisition, i.e., FERA, 1973 or FEMA 1999.Hence, agricultural land, plantation or farmhouse propertycan be acquired by way of inheritance only.
Foreign Nationals of Non- Resident Outside India Resident in India Indian Origin They do not meet the criterion of They meet the criterion of having having resided in India for 182 stayed in India for a period ofResidential Status days or more. 182 days of more. They may also be referred to as Persons Not Permanently Residents. Cannot purchase any Can purchase Immovable Immovable Property in India. Property after obtaining the Cannot be added as a second necessary approvals andAcquisition of property in India holder to a property purchased fulfillment of requirements, if any, by an NRI/PIO. prescribed by the concerned State Governments. Can take up residential Prior approval of RBI necessary accommodation on lease, for citizen of Pakistan, provided the period of the lease Bangladesh, Sri Lanka, does not exceed five years. In Afghanistan, China, Iran, Nepal such cases, there is no and Bhutan, in addition to State- requirement of taking any specific approvals. SuchReserve Bank of India (RBI) approval from the Reserve Bank requests are considered by theConditions of India. Reserve Bank of India in consultation with the Central Government. Prior approval of RBI not necessary for citizens of countries other than those mentioned above.